a) On 27th of September 2021, the Monetary Policy Committee (MPC) of Bank of Ghana maintained its key interest rate at 13.50% sighting risk to inflation. As a treasurer of a bank in Ghana, briefly explain the implications of such a decision on your bank to ALCO members.

b) The Government of Ghana has spent over GHS 15bn as payment to customers of some collapsed banks and Savings & Loans in Ghana over the past 3 years. The Government has argued that this was needed to restore confidence in the banking system so that banks can play their financial intermediation role again.

i) In your own words explain the term Financial Intermediation as applied to Banks.

ii) What are the advantages of Financial Intermediation?

iii) Explain how the establishment of Ghana Deposit Insurance Scheme will help reduce the high cost associated with bank failures should it occur in future.